Resource World Magazine

F E B R U A R Y / M A R C H 2 0 2 0 www.resourceworld.com 61 W hen all other options are considered, nuclear power is the most efficient and cleanest form of electrical gen- eration. Not only do nuclear power plants generate baseload electricity with no out- put of carbon, they also operate at much higher capacity factors than renewable energy sources or fossil fuels. In addition, they release less radiation into the environ- ment than any other major energy source including coal which can contain significant amounts of the radioactive elements ura- nium and thorium. Virginia Energy Resources Inc. [VUI- TSXV; VEGYF-OTCQX] owns a 100% interest in the Coles Hill uranium project in Virginia. The company says the proj- ect is the largest undeveloped uranium deposit in the US and one of the largest in the world. Coles Hill is located on rolling hills in Pittsylvania County, southern Virginia in close proximity to established infra- structure and skilled labour. Virginia is one of the leaders in the U.S. nuclear industry, being home to four high-per- forming nuclear power plants, commercial nuclear fuel production and engineering services, and significant naval nuclear infrastructure. The Coles Hill deposit was initially explored between 1980 and 1982 when Marline Uranium and Union Carbide drilled 210 holes (190,000 feet) to define the project's two uranium deposits. Between 1982 and 1983, a subsidiary of Union Carbide completed a feasibility study to place the project into commercial production, only to be shelved due to the drop in the price of uranium. At that time, a 5,000 ton-per-day open pit mine and mill was envisioned. The project lay dormant until 2007 when Virginia Uranium drilled 12 holes to confirm the historic grades as part of the initial NI 43-101 technical report and resource calculation. The potential for resource expansion exists along strike and at depth and higher-grade zones near sur- face provide many development options to improve project economics. The project consists of two approxi- mately 350-metre-long by 250-metre-wide ellipsoidal mineral deposits, the character of which is shaped by a complex combina- tion of three major factors: faulting, fracture zones and alteration. Coles Hill contains a fracture-hosted hydrothermal deposit, with uranium situated in mylonite. The deposit has characteristics of hydro- thermal fracture-type uranium deposits whereby hydrothermal solutions and associated uranium mineraliza- tion are hypothesized to have been mobilized by tectonic events. The mechanism of uranium deposition at Coles Hill is similar to that in the Athabasca Basin of Saskatchewan. A similar deposi- tion mechanism in the Athabasca Basin has produced signif- icant-grade uranium mineralization which might also occur in the untested deeper parts of the Coles Hill deposits. A 2013 NI 43-101 compliant technical report evaluated resources, mining con- cepts and processing of ore from the Coles Hill property. In summary, the preferable mining method is an underground stoping method although surface mining is a viable option. At this point in time, the company believes that an all underground mine approach can be effectively employed. Both acid and alkaline processing meth- ods have been investigated; however, due primarily to the consumption requirement and relative cost of sulfuric acid, an alka- line process appears to be the most viable in spite of a slightly lower recovery rate. Adequate information is available for this level of study given the historical efforts and tests that have been conducted. A Preliminary Economic Assessment (PEA) – which was updated in August 2013 – indicated the project was poten- tially attractive based on an assumed U 3 O 8 price of US $64 per lb. as summarized below: • Initial production of 2.0 million lbs per year and a 35-year mine life; • Underground mining of 3,000 tonnes per day, to extract a portion of the indicated resource totaling 64.2 M lbs U 3 O 8 with an average grade of 0.098% at a cutoff grade of 0.06%; • Capital cost of $147 million prior to con- struction, including a 25% contingency; • Cash cost of $30.72 per lb U 3 O 8 for the first 10 years of production; • Net Present Value of $427 million at a dis- count rate of 7%; • IRR of 36.3% based on a uranium price of US $64 per lb U 3 O 8 ; • A change in the price of uranium of US $5.00 per pound results in a poten- tial change in the project NPV of $110.0 million. At the present time, Virginia bans ura- nium mining and in June, 2019 the U.S. Supreme Court upheld its right to maintain its uranium moratorium which the com- pany is seeking ways to challenge. n MINING Despite moratorium, Virginia Energy pursuing development of Coles Hill deposit by David Duval Geologists test for uranium mineralization at the Coles Hill uranium project in southern Virginia. Source: Virginia Energy Resources Inc.

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